Following an ASIC submission to the Supreme Court of Queensland, five people who controlled MFS Investment Management (the responsible entity for the Premium Income Fund) have been disqualified from managing corporations.
The Premium Income Fund (PIF) was a managed investment scheme that misappropriated $147.5 million of funds, which were subsequently used to pay debts owed by other entities in the MFS Group (subsequently known as Octaviar).
The MFS Group collapsed in 2008 owing creditors $2.5 billion.
The Supreme Court of Queensland found in May 2016 that Michael Christodoulou King, Craig Robert White, David Mark Anderson, Guy Hutchings and Marilyn Anne Watts had collectively committed 217 contraventions of the Corporations Act.
On Friday, the court ordered that Mr King (former chief executive and director of MFS) be disqualified for 20 years, pay a pecuniary penalty of $300,000, pay $177,017,084 compensation to PIF and 60 per cent of ASIC's costs.
The court ordered Mr White (former deputy chief executive) be permanently disqualified from managing corporations, pay a pecuniary penalty of $650,000, pay $205,755,601 compensation to PIF and 70 per cent of ASIC's costs.
Mr Hutchings (former chief executive) was disqualified from managing corporations for 25 years and ordered to pay a pecuniary penalty of $350,000, pay $28,738,517 compensation to PIF and 70 per cent of ASIC's costs.
The court ordered Mr Anderson (former chief financial officer and company secretary) be disqualified from managing corporations for 25 years, pay a pecuniary penalty of $500,000, pay $205,755,601 compensation to PIF and 80 per cent of ASIC's costs.
Finally, the court ordered Ms Watts (former funds manager of MFSIM) be disqualified from managing corporations for five years, pay a pecuniary penalty of $90,000 and 40 per cent of ASIC's costs.
Justice James Douglas said the legal requirements of the executives were "flagrantly ignored" and that the penalties "should reflect the complete disregard which these defendants had to to their duties under the Corporations Act".
"[ASIC's] submissions were justified. The insouciant attitude of the defendants to this misuse of money intended to be used for PIF's investors beggars belief," said Justice Douglas.
Note: MFS Investment Management mentioned in this story is in no way related to the Boston-based investment management group of the same name.
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